University:
California State University, Northridge
Course:
ACCT 460 | Auditing Principles and Analytics
Academic year:

2024
Views:

152

Pages:

10
Author:

cicwyr4xc

Audit of the Payroll and Personnel Cycle Chapter 20 Part 2 Learning Objective 4 Design and perform analytical procedures for the payroll and personnel cycle. Analytical Procedures for the Payroll and Personnel Cycle Analytical procedure Possible misstatement Compare payroll expense account balances with previous years Misstatement of payroll expense accounts Compare direct labor as a percentage of sales with previous years Misstatement of direct labor and inventory Analytical Procedures for the Payroll and Personnel Cycle Analytical procedure Possible misstatement Compare commission expense Misstatement of as a percentage of sales with commission expense previous years and commission liability Compare payroll tax expense Misstatement of payroll as a percentage of salaries and tax expense and payroll wages with previous years tax liability Compare accrued payroll tax accounts with previous years Misstatement of accrued payroll taxes and expense Learning Objective 5 Design and perform tests of details of balances for accounts in the payroll and personnel cycle. Two Major Balance-related Audit Objectives 1. Accruals in the trial balance are stated at the correct amounts (accuracy). 2. Transactions in the payroll and personnel cycle are recorded in the proper period (cutoff). Tests of Details of Balances for Liability Accounts  Amounts withheld from employees’ pay  Accrued salaries and wages  Accrued commissions  Accrued bonuses  Accrued vacation pay, sick pay, or other benefits  Accrued payroll taxes Tests of Details of Balances for Expense Accounts  Officers’ compensation  Commissions  Payroll tax expense  Total payroll  Contract labor Presentation and Disclosure Objectives  Required disclosures are not extensive  Some complex transactions require footnote disclosure Types of Audit Tests for the Payroll and Personnel Cycle Payroll Liabilities Cash in Bank Direct Labor and Payroll Expenses Payments Expenses Audited by TOC, STOT, and AP Audited by TOC, STOT, and AP Ending balance Ending balance Audited by AP and TDB TOC + STOT + AP + TDB = Sufficient appropriate evidence per GAAS